Spain: Finance Ministry vetoes tobacco tax

In Spain, a few weeks after the government announced a new National Plan for the Prevention and Fight against Smoking, the project to implement a policy of increasing taxes on all these products should be put on the blacklist. This turnaround follows the opposition of the Ministry of Finance to a fiscal trajectory.

Fourteen years after its last anti-smoking plan, the Spanish government announced at the beginning of April that it had adopted a new general plan to combat smoking, taking into account changes in consumption and the emergence of new products. This plan was placed, and in the perspective of achieving the objective of a tobacco-free generation by 2040. Praised by public health and anti-smoking organizations, the new national plan was structured around four main axes: introducing plain packaging for cigarette packets, increasing the number of tobacco-free areas, better regulating vaping products, and implementing a policy of significant tax increases on all tobacco products.

A decline motivated by the desire not to generate unsold stocks

The implementation of a tax trajectory on all tobacco products has met with hostility from the Spanish Ministry of Finance, which vetoed the measure. According to the Ministry, such a measure could result in the generation of unsold tobacco stocks. This reason motivated the government to withdraw the tax increases from the country's anti-smoking programme. However, the Ministry of Finance indicated that the possibility of a future tax review was not completely excluded. By stating that the tax policy would generate unsold stocks due to a drop in consumption following the implementation of the measure, the Spanish Ministry of Finance implicitly endorses the effectiveness of tax policies in the fight against smoking. However, the Treasury's decision shows that the economic considerations of balancing the tobacco market have taken precedence over public health objectives. On this point, this government retreat could partly be explained by a lobbying effort by the tobacco industry, systematically opposed to the implementation of tobacco tax increases, precisely because of the effectiveness of such a measure. On January 1, 2024, the price of the best-selling packet of cigarettes in Spain was 5.50 euros, more than half the price currently charged in France.

Spain's ambivalent relationship with the fight against smoking

The blocking of a new tax trajectory once again demonstrates the ambivalence of public authorities in the fight against smoking in the country. Thus, in 2022, the Spanish government had indicated that it wanted to award 203 new tobacco shops through an auction, including around thirty located near the French border, with the aim of generating new tax revenues and attracting French cross-border consumers. Such an initiative had aroused opposition from the main players in the fight against smoking in Spain, but also in France. According to the latest figures from the World Health Organization, Smoking prevalence remains very high in Spain, with nearly 20% daily smokers among the population aged over fifteen.

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FT

National Committee Against Smoking |